"The local sugar sector will largely benefit from the passage of the national ethanol program because production will be increased considerably. At the same time, it will bring in new investors that will put up the required ethanol plants," said Bukidnon Rep. Miguel Zubiri.
Zubiri is the principal sponsor of the bill in Congress that seeks to establish a national ethanol program. The bill proposes the grant of fiscal and non-fiscal incentives and tax breaks to ethanol projects.
Under the government’s National Fuel Ethanol Program, private entities are encouraged to invest in the production of biofuels and distribution of bio-fuel blends.
The government’s ethanol program aims to intensify the use of bio- fuels in the transport sector by blending a minimum of five percent bio-ethanol fuel into all gasoline-fed motor vehicles within two years after the law takes effect. Government wants to raise the percentage of bio-ethanol blend to 10 percent by 2010.
Zubiri said that feasibility studies show that using a five percent ethanol blend will require expanding sugar hectarage by 300,000 hectares from the current 380,000 hectares. A 10 percent ethanol blend will further require raising the hectarage by another 300,000 hectares in four years.
"This is a very upbeat program, it is promising for the sugar industry which will now have a new market for its product, especially if the transport sector raises its demand for ethanol," said Zubiri.
Under the Philippine Energy Plan of the Department of Energy, the projected ethanol requirements would reach 636.6 million liters by 2013 at a 10 percent blend.
At the same time, the shift to bio-fuels such as ethanol will require investments of about P24 billion. To be able to go full steam with the 10 percent ethanol blend, 16 ethanol plants at a cost of P1.5 billion each would be needed.
Zubiri said once the bill is enacted, the Philippines has the potential to become a major producer of alternative fuels.
There are already plans by four small oil players to sell ethanol-blended gasoline in at least 400 service stations nationwide by September this year.
Energy Undersecretary Peter Anthony Abaya said that Seaoil, Unioil, Flying V and USA 888 will be putting up additional pumps to jumpstart the Department of Energy’s National Fuel Ethanol Project aimed at reducing the country’s dependence on expensive imported oil
"An even better news is that the oil companies, instead of blending a minimum five percent ethanol to gasoline, will be actually using a higher 10 percent blend. The companies will be initially importing 25 million liters of ethanol for this purpose but eventually, when the ethanol bill is passed and the infrastructures are in place, oil companies will be getting ethanol supply from local producers," said Abaya.
To encourage investors to pour money into the establishment of ethanol production facilities, Malacanang recently issued an executive order that reduced the tariff on ethanol to one percent from 10 percent.
Zubiri said there are also several ethanol plants that are in various stages of construction in anticipation of the enactment of the ethanol bill.
Ethanol is an alternative energy resource produced from crops such as corn, grain sorghum, wheat, sugar and other agricultural feedstocks. It can be used as a transportation fuel, as a blend to gasoline, a component of reformulated gasoline, or a primary fuel with gasoline as blend.
"The use of ethanol as an additive to gasoline will be good for the sugar industry. It will encourage sugar planters that shifted before to planting other crops such as corn to go back to sugar production. This policy assures the industry of a stable market and will keep farmgate prices of sugar stable," said Sugar Regulatory Administrator James Ledesma Jr.